Pecuniary Knowledge Externalities in a New Taxonomy: Knowledge Interactions in a Vertically Integrated System

The paper presents a new sectoral taxonomy that focuses on the existence of non negligible external effects, deriving from user-producer knowledge interactions, the latter in turn coupled with intermediate goods transactions, in a system of vertically integrated manufacturing and services sectors. These externalities, the so called pecuniary knowledge externalities, are the main source of changing technological conditions experienced by downstream producers. A distinguishing feature of the taxonomy consists, thus, in being derived from a particularly dynamic contexts of changing production functions. The taxonomy is obtained from an empirical exercise, examining effects generated by idiosyncratic knowledge in a system of input-output intermediate transactions between sectors in the European economy. The results permit to classify sectors in five groups, confirming the previous evidence of relevant differences in technological characteristics among sectors.